Malampaya contributed $11B to gov’t as of end-August 2019

Energy Secretary Alfonso Cusi has visited the Malampaya Deep Water Gas-to-Power platform in offshore Palawan in this undated photo from Pilipinas Shell Petroleum Corp. In photo from left are Shell Philippines Exploration B.V. (SPEX) offshore installation manager Bonifacio Lapuz, SPEX general manager Don Paulino, SPEX senior asset commercial advisor Charisse Choa, Secretary Cusi, Energy Undersecretary Donato Marcos, and SPEX external relations manager for upstream Paulo Gavino. Pilipinas Shell

The government’s share from the Malampaya gas-to-power facility has reached $11 billion as of end-August this year, Pilipinas Shell Petroleum Corp. said Thursday.

The amount represents royalties since the project started commercial production in 2001.

Apart from the $11 billion in favor of the government’s coffers, the Malampaya project also saved the country around $8 billion in energy imports, Pilipinas Shell said.

The Malampaya gas-to-power facility supplies natural gas to five natural gas power plants in Batangas, including Sta. Rita (1,000 MW), San Lorenzo (500 MW), Ilijan (1,200 MW), Avion (97 MW), and San Gabriel (414 MW)—which account for about half of the Luzon grid’s power requirements.

The facility paved the way for fossil fuel as a cleaner alternative to coal, Pilipinas Shell said.

The company cited an article from Petroleum Association of the Philippines (PAP) chairman Rufino Bomasang, noting how the outstanding success of Malampaya could serve as lesson for future developers of upstream energy projects in the country.

Bomasang recalled the challenges during the first oil crisis in the 1970s in the Middle East.

The turmoil pushed the Philippines to launch a comprehensive indigenous energy program in 1976, lessening the country’s near-total reliance on imported energy.

“This ultimately led to the reduction of Philippine dependence on imported energy from 92% in 1976 to about 40% by 2016,” Bomasang noted.

It was the outcome of various initiatives, among them the discovery of small but commercially viable oil fields and the development of the world class Malampaya Deep Water Gas-To-Power Project.

Although it required over 500 kilometers of undersea pipeline to reach the Luzon market, Malampaya managed to generate 40 to 50% of the island’s power requirements.

The gas-to-power facility is operated by the Malampaya consortium—composed of Shell Philippines Exploration B.V., Chevron Malampaya LLC, and PNOC Exploration Corporation.

Shell’s decision to allow PNOC-EC to participate in the project enabled its managers and engineers to take notes from the oil giant, Bomasang noted.

The involvement of state-owned PNOC-EC further strengthened the public image of its multi-national affiliates, SPEX and Chevron, according to Pilipinas Shell.

Despite being a complex initiative, Malampaya, which has a depth of  850 meters, was completed on time and under budget, it said.

Bomasang credited the Philippine government for making the project possible by implementing incentives, consistent policies, and staying true to the “sanctity” of policies.

The government’s actions “made it viable to develop a natural gas field in prohibitive water depth and so far from the market,” he said.

“For the Philippines to find and develop the next Malampaya, it is of utmost importance that these policies are kept intact,” Bomasang emphasized.

Estimates showed Malampaya’s gas reserves are sufficient only until 2022 to 2024.

The Malampaya consortium’s service contract is set to expire in 2024. —VDS, GMA News